‘Reform’ groups make major push on payment limits

With the Senate expected to take up a new farm bill the week of Nov. 5, farmers were growing hopeful the legislation could be enacted in time for them to incorporate it into their plans for the 2008 crop year.

But those farmers may not be so eager to embrace the new law if a growing coalition of farm bill “reformers” is able to find enough votes to win adoption of proposed new payment limit rules in the legislation.

The rules are contained in the amendment Sens. Byron Dorgan, D-N.D., and Charles Grassley, R-Iowa, have said they will offer when the farm bill comes to the floor. They introduced a similar amendment which passed the Senate with 66 votes but was later removed from the 2002 farm bill by the conference committee.

A close examination of a position paper being circulated in Washington shows the new Grassley-Dorgan amendment could be even more debilitating than its authors’ previous attempts at targeting farm payments to so-called family farmers.

Grassley-Dorgan would clearly be preferable to reform groups such as the Nebraska-based Center for Rural Affairs, which singled out Sen. Kent Conrad, D-N.D., for special criticism for his role in the compromise payment limit language in the Senate Ag Committee bill.

“Sen. Conrad made a deal with the devil that won a little money for commodities at the price of destroying family farming,” said Chuck Hassebrook, executive director of the Center. “The deal would continue multi-million dollar payments to the nation’s largest farms and work against the one true reform on the table — the Dorgan-Grassley amendment.”

Current law allows farmers to receive $40,000 in direct payments and $65,000 for counter-cyclical payments on up to three entities per farm owner. The total amount for an individual — $105,000 — can be doubled to $210,000 for a farmer and spouse.

Farmers can receive up to $75,000 in marketing loan gains or loan deficiency payments and an unlimited amount in commodity certificates under the 2002 farm bill. The marketing-loan-gain or LDP limit can be doubled to $150,000, which means an individual can receive up to a total of $360,000.

The House-passed farm bill raises the limits for direct payments to $60,000 and counter-cyclical payments to $65,000 per individual (or double that for a couple) while the Senate Ag Committee bill keeps the limit for direct payments at $40,000 and lowers the counter-cyclical limit to $60,000. Both eliminate the three-entity rule and require direct attribution to a person.

According to the position paper, the Grassley-Dorgan amendment would put a limit of $20,000 on direct payments and the new optional ACR fixed payment, and $30,000 on counter-cyclical payments or the ACR counter-cyclical for a total of $50,000. The paper says the amount could be doubled to $100,000 for single or married farmers.

The Grassley-Dorgan amendment would retain the limit of $75,000 on marketing loan gains and loan deficiency payments and include commodity certificates in that $75,000. Allowing for doubling the $50,000 limit on direct and CCP payments and the $75,000 limit on marketing loan gain results in the “hard cap” of $250,000.

The Grassley-Dorgan amendment does not contain a limit on adjusted gross income, but the Senate Ag Committee AGI restriction of $750,000 for part-time or non-farmers would apply if the bill is passed.

More importantly, Grassley-Dorgan would “ensure funds were directly attributable to an individual rather than a corporation,” according to the position paper, which claims the amendment would “restore integrity to the farm program and focus support on those who need it most.”

The latter is a theme that’s been pounded home for months by groups such as the Center for Rural Affairs, the Sustainable Agriculture Coalition, Environmental Defense, the Environmental Working Group, Bread for the World and the National Urban League.

The Environmental Working Group, headed by Ken Cook, has published the names of thousands of farm program payment recipients on its www.ewg.org Web site to try to influence public opinion against agricultural subsidies to larger farmers.

The Sustainable Agriculture Coalition accused the Senate Agriculture Committee of backing down from comprehensive payment limit reform and choosing, instead, to hide behind a “fig leaf” reform proposal. The latter, it said, adopts direct attribution of payments and eliminates the three-entity rule, but keeps other loopholes open.

“The Senate, like the House, chose to maintain waste, fraud and abuse as our commodity limitation policy,” said Ferd Hoefner, the Sustainable Ag Coalition’s policy director. “Payments are effectively uncapped under current law and under the Senate Committee proposal.

“Real reform must now be made in the form of passage of the Senate floor amendment to be introduced by Senators Dorgan and Grassley that will put a hard cap of $250,000 on commodity payments and close all the loopholes so that mega farms cannot get unlimited payments at the expense of family farms and taxpayers.”

Reform groups also appear to be going after cuts in direct payments, one of the two largest spending categories in the farm bill. Direct payments, they note, are slated to cost taxpayers $26 billion over the next five years.

Environmental Defense, another public interest group that has been weighing in on the farm bill, has been releasing results of polls that show three out of four respondents agreed that their senators should support shifting money out of subsidies like direct payments to conservation programs.

“These polls suggest that senators outside the traditional farm belt will be taking a political risk if they support a status quo farm bill,” says Sara Hopper, a spokesman for Environmental Defense. “Senators can improve their standing with the public by supporting reductions in farm subsidies and increased funding for programs that reward farmers for helping the environment.”

Besides listing payment recipients on its Web site, the Environmental Working Group has also been issuing press releases claiming that 60 percent of the nation’s farm subsidies go to states whose senators serve on the Agriculture Committee.

The EWG claims about 10 percent, or 152,000 entities out of all the recipients, will get 60 percent of the money, or about $15.8 billion. That averages to $104,000 each over five years. The top 1 percent, or 15,200 recipients, will get more than $3.3 billion, averaging $220,500 each.

During the Senate Ag Committee debate, Sen. Richard Lugar, R-Ind., offered an amendment that would have reduced direct payments 6.5 percent and transferred the savings to the Food Stamp and The Emergency Food Assistance Program or TEFAP.

Committee members defeated the amendment 17-4, but Lugar’s speech introducing the amendment obviously struck a nerve. Several committee members said they would support taking savings from direct payments or the new ACR option and applying them to the TEFAP program.

Lugar says he plans to introduce the same amendment when the farm bill comes up on the Senate floor. He also says he will introduce the Farm Ranch Equity Stewardship and Health Act of 2007 he and Sen. Frank Lautenberg, D-N.J., authored as a replacement for the Senate Ag Committee farm bill.